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STRATEGY – SINGAPORE Alpha Picks: Add SGX, Hong Leong Asia; Remove China Sunsine, Thai Beverage
With a 6.0% mom gain in Apr 21, our portfolio beat the FSSTI’s 1.7% mom increase by 4.3ppt. Notable outperformers from our portfolio included Innotek (+28.7% mom), Yangzijiang (+11.7% mom) and UMS (+8.3% mom) while our short call on SIA also did well (-8.8% mom). For May, we add two newly-initiated stocks, SGX and Hong Leong Asia, and remove China Sunsine and Thai Beverage.
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Singapore Strategy Rinse and repeat
■ Singapore is reinstating pre-emptive phase 2 safety measures from 8 to 30 May to avoid the repeat of a circuit breaker. ■ With FSSTI at 3,179 and trading at mean valuations (14.4x CY22F), we think profit taking is likely in the short-term among the YTD outperformers. ■ Short-term losers: DBS, OCBC, SATS, SIA, CD, retail REITS, GENS, Jumbo. ■ Winners: SEA, Sheng Siong, Dairy Farm, UG Healthcare, Riverstone and industrial REITS (MLT, KDC REIT, AREIT and MINT).
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CGS CIMB |
MAYBANK KIM ENG |
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AEM Holdings Ltd Management optimistic on outlook
■ We deem 1Q21 net profit at 12.6% of our full-year expectations as in line since we expect earnings to be 2H21 loaded. ■ AEM has guided that FY21F revenue could be in the range of S$460m to S$520m. ■ We reiterate our Add call with a TP of S$4.63. We have yet to pencil in CEI financials into our forecast.
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Hartalega (HART MK) Valuations still palatable
Trading at ex-cash FY24E PE of 25x; maintain BUY 4QFY21 results was below our expectation as COVID-19 outbreak at its plants has resulted in a sharp drop in its sales volume. However, we expect its 1QFY22 earnings to jump as its plant utilisation rate has already recovered to c.90% level and margin could expand on a slightly higher ASP amid a softer NBR cost. Maintain our FY22-23E EPS and introduce FY24E. Our DCF-based TP is lowered to MYR13.10 (-20%; WACC: 7.2%) as we lower our terminal growth rate to 3.5% (from 4.5%) to account for the rapid supply growth from China. Maintain BUY.
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Check out our compilation of Target Prices